Before the Beckham Law came into effect, foreign individuals who stayed in Spain over 183 days each year were considered tax residents and had to pay income tax on their worldwide assets. The Beckham law allows you to avoid these taxes by becoming a non-resident for tax purposes in Spain.
Benefits
Spain has become a popular destination for digital nomads, thanks to its low costs of living and abundance of co working spaces. But a new tax law that offers significant financial benefits for expats is also encouraging people to relocate to Spain and start their own businesses.
The Beckham law allows foreign entrepreneurs to establish residency for tax purposes in Spain and pay a flat rate of 24% income tax, which is significantly lower than the top marginal rate for Spanish residents. It also allows them to cancel property and income taxes in their home countries.
However, there are some restrictions to the Beckham law. For example, it only applies to individuals who run an active business in Spain. Additionally, directors of entidad patrimonial companies cannot claim the benefit. Also, capital gains from abroad are still taxable in Spain. These limitations are intended to prevent abuse of the law by wealthy individuals trying to evade taxes.
Requirements
The Spanish expatriate tax regime, also known as Beckham law (Regimen especial para trabajadores desplazados a territorio espanol) has some requirements that need to be met in order to benefit from it. First of all, the person in question must become a tax resident in Spain. This involves being contracted by a Spanish company and registering with the Social Security Administration.
The Beckham law allows those who meet the requirements to pay a fixed reduced rate of 24% on income produced in Spain for the first six years. This is a much lower rate than the progressive taxes that non-residents are charged, which can reach up to 47%.
However, the benefits of beckham law do not stop there. It also helps expats avoid wealth taxes, as they will be only liable for these on assets located in Spain. This is a major advantage for those moving to a new country and for those who are considering becoming a director of a company in Spain.
Taxes
As the name suggests, the Beckham Law allows expats to save on taxes. Also known as the Special Expats’ Tax Regime or SETR, it has a number of requirements that must be met in order to qualify. For example, you must become a Spanish resident and submit a formal application with documentation to prove that you meet the requirements of the regime.
One of the key features of this special regime is that you will be taxed on your income in Spain at a fixed rate of 24%. This is significantly lower than the progressive rates that apply to Spanish residents.
Additionally, you will only be taxable on the net value of your assets in Spain. This will reduce your wealth tax burden and make it easier to manage your finances. This new tax benefit is a great incentive for businesses that hire expats and professionals in Spain. It will help them attract top talent and increase their competitiveness.
Deel’s visa mobility support
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The company’s mission is to give millions of people the chance to work for the best companies in the world, no matter where they are born. As part of this goal, the company has recently forged partnerships to fast-track work visas for remote workers in the UAE and elsewhere.
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